Bitcoin is currently in an awkward position once again. Is it gathering momentum for a correction or is it running out of steam? How will Bitcoin’s market outlook develop? This round of bull market growth is very different from the previous one. This article analyzes the main factors that promote the development of Bitcoin market and looks forward to the market outlook of Bitcoin.
Source: PANews
Analysis of factors driving Bitcoin price – Bitcoin ETF
There are many different observations in the market regarding the rise in the current bull market. Judging from the current market changes, the increase or decrease in holdings of Bitcoin ETFs by institutions is a very important influencing factor; in addition, it is closely related to the Federal Reserve’s interest rate policy. Relevant information and data also significantly affect the market changes of Bitcoin. This article first focuses on analyzing these two driving factors.
After the adoption of Bitcoin ETF, the changes in institutional demand for Bitcoin ETF can be roughly divided into three stages. As can be seen from the figure below (data as of June 15), in the first stage, institutions increased their holdings of Bitcoin ETFs in large quantities, and their demand was very strong; in the second stage, institutions increased their holdings of Bitcoin ETFs. There has been a significant decline, and the selling volume even exceeded the accumulation at one time; in the third stage, institutional demand for Bitcoin ETF has rebounded to a certain extent compared with the second stage, but has dropped significantly compared with the first stage.
What is the reason for the high demand for Bitcoin ETFs in the first phase? This article believes that this is the release of long-established needs of the organization, and in a sense it also has the meaning of rushing for funds. However, after Bitcoin reached around $70,000, the market's upward momentum plummeted and selling intensified, indicating that institutional demand began to slow down. Looking at a deeper level, this means that the institutional strategy has begun to change from rushing for funds to strategic position building (sell high and buy low). Once it believes that the price is too high, it will tend to sell. In the process of this transformation, a landmark event is that BlackRock’s Bitcoin holdings surpassed Grayscale, which has been working in the crypto market. This is like in a relay race, the original crypto giant officially handed over the right to speak. To traditional Wall Street giants.
What does the rebound in demand for Bitcoin ETFs indicate in the third phase? On May 1, there was a massive sell-off in Bitcoin ETF funds, with the price of Bitcoin falling sharply to $58,307, and then the Bitcoin ETF began to accumulate holdings again. This may mean that $58,000 is a more suitable buying price for Bitcoin. This may also be determined by the cost of mining Bitcoin.
Analysis of factors driving Bitcoin price – Bitcoin miners
On April 20, Bitcoin completed its fourth halving. As the block reward was halved, its income was directly reduced by half, which will also significantly increase the mining costs of miners. Data from The Block Pro shows that Bitcoin miner revenue in May (due to the fourth halving event in April) decreased by 46% month-on-month to $963 million. Due to changes in the income and expenditure of Bitcoin miners, this will also affect their investment decisions. Their selling behavior and mining costs can provide a buying and selling reference price for Bitcoin investment.
On June 13, CryptoQuant published an article on the As Bitcoin prices fluctuated between $69,000 and $71,000, miners stepped up selling. Data shows that on June 10, miners sold 1,200 Bitcoins through OTC transactions, setting the highest daily trading volume in two months. Additionally, major U.S. Bitcoin companies have also stepped up their selling efforts.
According to data from Biyin’s official website, as of June 15, mining machines such as the Antminer S19 have reached the shutdown price. In addition, the shutdown price of a large number of mining machines is around US$60,000. This is also the main reason why the market can be supported here.
Taken together, the miners' selling behavior suggests that the Bitcoin price is between US$69,000 and US$71,000, which may be a more suitable selling price in the short term, while a large number of miners' mining shutdown prices are in the range of US$58,900 - US$63,300, which may be a suitable selling price in the short term. A more suitable buying price in the short term. This can be confirmed by the trend changes of Bitcoin ETF mentioned above, and they are strongly related to each other.
Analysis of Bitcoin Price Driving Factors—General Economy and Finance
The overall U.S. economic policies and data have a very direct impact on Bitcoin. Once data and meeting statements that are conducive to the Federal Reserve's interest rate cut appear, the probability of Bitcoin rising will increase significantly; and vice versa.
On June 7, the U.S. non-farm payrolls increased by 272,000 in seasonally adjusted May, the largest increase since March this year, higher than market expectations and significantly higher than last month's 175,000. The non-agricultural data exceeded market expectations, which showed that the U.S. economy is still strong. As a result, the market's expectations for an interest rate cut by the Federal Reserve decreased. Bitcoin also fell sharply, breaking the previous upward trend.
Subsequently, on June 12, data from the U.S. Bureau of Labor Statistics showed that the overall CPI in the United States was flat month-on-month in May, and the index rose 0.3% in April. CPI has been trending downward since solid data were released in February and March. Analyst Chris Anstey pointed out that this is actually the first month of good inflation reports, and it will take a few more such good reports to really get the Fed to cut interest rates in September. Affected by the cooling of U.S. CPI in May, the market increased expectations for the Federal Reserve to cut interest rates in September, and Bitcoin also rebounded sharply.
Then on June 14-15, the Federal Reserve issued a regular meeting statement: Information obtained by the Federal Open Market Committee (FOMC) since its April meeting showed that the pace of improvement in the labor market has slowed, although economic activity growth appears to have slowed. Has been accelerated. Although the unemployment rate fell, job creation declined. Household spending growth strengthened. The housing market has continued to improve since the beginning of the year and the drag on the economy from net exports appears to have eased, but corporate fixed investment has been weak. Market-based measures of inflation compensation have declined, with most survey-based measures showing longer-term inflation expectations have been largely unchanged in recent months. Affected by this report, Bitcoin is currently stabilizing after falling, and in a sense, the overall economic impact is actually weakening.
On the whole, the impact of overall economic policy is long-term; at the same time, at key nodes when certain important data are released, its impact on Bitcoin is extremely significant. With the release of key data, Bitcoin has returned to a balance, and the long-short game in the market has begun again.
Analysis of factors driving Bitcoin price - Bitcoin technology development
I have mentioned in many previous articles that the real or essential reason for supporting the development of Bitcoin is its own technological development. Although the technological development of Bitcoin is slow, every technological development can drive a financial boom. The main reason for the popular inscriptions in 2023, as well as subsequent runes, etc., is the Taproot upgrade.
In 2024, Bitcoin will also usher in a series of important upgrades, such as supporting the expression smart contract BitVM on Bitcoin, launching the Taproot Assets mainnet, OP_CAT proposal, OP_TXHASH draft proposal, Lightning Timeout Trees, updated Musig 2 proposal, BIP- 324 – V2 Transmission etc. After implementing a series of upgrades, many new applications can be unlocked. We have seen the birth of many Bitcoin Layer 2 projects, opening up territory for Bitcoin’s financial landscape. On June 7, Ethereum Layer 2 leader Starknet also announced its entry into Bitcoin, and the key depends on whether the OP_CAT proposal can be passed. This article believes that as more and more Bitcoin technologies are upgraded, more and more application scenarios and applications will be generated, thereby promoting the development of Bitcoin and its ecosystem.
Judging from the current data, the ecological development of Bitcoin is still in its early stages. The runes, inscriptions, and the second layer of Bitcoin that were previously hotly discussed have begun to enter the ecological construction period. Taking the Bitcoin Layer 2 leader Merlin as an example, DefiLlama data shows that as of June 15, Merlin’s monthly capital inflows grew by 162%, making it the fastest growing among the top ten public chains and Layer 2; its TVL funds currently reach 1.196 billion USD, ranked eighth, has surpassed many established public chains in just a few months.
Bitcoin short-term market outlook
From a technical point of view, the new Bitcoin proposal OP_CAT may become the main driving factor and core factor in the next round of Bitcoin rise. Once it is officially incorporated into the Bitcoin Core code, it will undoubtedly greatly promote the development of the Bitcoin ecosystem and Drive the price of Bitcoin to rise. From the perspective of the overall economy, with the overall upward movement of the interest rate dot plot, the median interest rate will increase from 4.6% to 5.1% in 2024, which means that there may be only one interest rate cut during the year, and the probability of an interest rate cut in September has increased. From the mid-term market point of view, Bitcoin may usher in the Golden Nine and Silver Ten. From a short-term market perspective, Bitcoin miner behavior and mining shutdown prices provide a buying and selling reference price: the bottom range is US$58,900-63,300; the short-term top range is US$69,000-71,000.
[Disclaimer] There are risks in the market, so investment needs to be cautious. This article does not constitute investment advice, and users should consider whether any opinions, views or conclusions contained in this article are appropriate for their particular circumstances. Invest accordingly and do so at your own risk.
This article is reproduced with permission from: "PANews"
Original author: BitPush
